Oil prices slide as market shrugs off expanded E.U. sanctions on Russia

[Data analyzing in commodities energy market: the charts and quotes on display. US WTI crude oil price analysis. Stunning price drop for the last 20 years.]
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Crude futures fell Friday for the third straight day, erasing gains made early in the week following Ukrainian attacks on Russia's energy infrastructure, hitting key refineries and export facilities, including the Primorsk terminal.

Russian oil exports to China and India declined for the second week in a row, analysts said, raising the prospect that - if the trend continues - Russia ultimately could be forced to cut oil production.

The European Union unveiled a new package of sanctions [https://www.wsj.com/world/europe/under-trump-pressure-eu-proposes-going-after-chinese-companies-buying-russia-oil-04217940] Friday against Chinese and other foreign companies buying Russian oil, intending to show President Trump the bloc is ramping up economic pressure on Russia and its backers.

The package - the E.U.'s 19th since Russia's 2022 invasion of Ukraine - also includes sanctions against Russia's energy, banking and crypto sectors, and speeding up the bloc's phaseout of purchases of Russian liquefied natural gas a year earlier than previously planned, President Ursula von der Leyen said.

The new measures also include a lower crude oil price cap of $47.60/bbl, and new sanctions against vessels carrying oil subject to Western restrictions.

The package will need the backing of all 27 member states - which is far from guaranteed - and Mizuho's Robert Yawger noted the previous 18 rounds of E.U. sanctions "have proven largely ineffective in stopping the flow of Russian oil exports."

"The balancing act of OPEC+ oversupplying the global market against a possible drop in Russian oil sales is keeping crude futures in very tight trade," ROK Financial's Dennis Kissler said in a note.

Earlier this week, the U.S. Federal Reserve reduced interest rates by 0.25% and signaled two more reductions this year, but "the Fed's action is not translating to growth for the crude market due to underlying market fundamentals," Again Capital's John Kilduff wrote, adding that further quarter-point rate cuts likely would not help oil markets since they would further weaken the dollar, making oil more expensive to buy.

In Citi's quarterly outlook, the bank's analysts forecast Brent crude easing toward $60/bbl by the end of this year and into 2026, as the OPEC+ decision to start unwinding a second layer of production cuts adds to expected global stock builds, which the bank now pegs at 1.1M bbl/day in 2025 and 2.1M bbl/day in 2026.

Citi said a bear case that could push Brent toward $50/bbl might happen if global demand erodes on weaker macroeconomics and trade, supply rises faster than expected, and if China stockpiling disappoints.

Front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for October delivery finished Friday -1.4% to $62.68/bbl, front-month November Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) settled -1.1% to $66.68/bbl, and front-month October Nymex natural gas (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) closed -1.7% to $2.888/MMBtu.

For the week, Nymex crude finished flat, Brent fell 0.4%, and U.S. natural gas dropped 1.8%.

ETFs: (NYSEARCA:USO [https://seekingalpha.com/symbol/USO]), (BNO [https://seekingalpha.com/symbol/BNO]), (NYSEARCA:UCO [https://seekingalpha.com/symbol/UCO]), (SCO [https://seekingalpha.com/symbol/SCO]), (USL [https://seekingalpha.com/symbol/USL]), (DBO [https://seekingalpha.com/symbol/DBO]), (DRIP [https://seekingalpha.com/symbol/DRIP]), (GUSH [https://seekingalpha.com/symbol/GUSH]), (USOI [https://seekingalpha.com/symbol/USOI]), (UNG [https://seekingalpha.com/symbol/UNG]), (BOIL [https://seekingalpha.com/symbol/BOIL]), (KOLD [https://seekingalpha.com/symbol/KOLD]), (UNL [https://seekingalpha.com/symbol/UNL]), (FCG [https://seekingalpha.com/symbol/FCG]), (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE])

Energy stocks, as represented by the Energy Select Sector SPDR Fund (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE]), ended roughly unchanged.

Top 20 gainers in energy and natural resources in the past 5 days: New Fortress Energy (NFE [https://seekingalpha.com/symbol/NFE]) +78.6%, Oklo (OKLO [https://seekingalpha.com/symbol/OKLO]) +63.5%, Plug Power (PLUG [https://seekingalpha.com/symbol/PLUG]) +43.4%, Flux Power (FLUX [https://seekingalpha.com/symbol/FLUX]) +42.5%, American Battery Technology (ABAT [https://seekingalpha.com/symbol/ABAT]) +42.2%, American Resources (AREC [https://seekingalpha.com/symbol/AREC]) +41.4%, Nano Nuclear Energy (NNE [https://seekingalpha.com/symbol/NNE]) +40.1%, Energy Vault (NRGV [https://seekingalpha.com/symbol/NRGV]) +35.1%, Fluence Energy (FLNC [https://seekingalpha.com/symbol/FLNC]) +33.7%, Anfield Energy (AEC [https://seekingalpha.com/symbol/AEC]) +33.3%, Centrus Energy (LEU [https://seekingalpha.com/symbol/LEU]) +32.6%, Ballard Power (BLDP [https://seekingalpha.com/symbol/BLDP]) +32.4%, U.S. Antimony (AUMY) +31.6%, Lightbridge (LTBR [https://seekingalpha.com/symbol/LTBR]) +30.7%, Nuscale Power (SMR [https://seekingalpha.com/symbol/SMR]) +28.7%, Bloom Energy (BE [https://seekingalpha.com/symbol/BE]) +26.3%, Ramaco Resources (METC [https://seekingalpha.com/symbol/METC]) +25.4%, Encore Energy (EU [https://seekingalpha.com/symbol/EU]) +25.1%, Energy Fuels (UUUU [https://seekingalpha.com/symbol/UUUU]) +24.5%, Enovix (ENVX [https://seekingalpha.com/symbol/ENVX]) +23.9%, Peabody Energy (BTU [https://seekingalpha.com/symbol/BTU]) +23.4%.

Source: Barchart.com

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